The Dynamics of Immigrant Welfare and Labor Market Behavior

45 Pages Posted: 14 Sep 2001

See all articles by Jorgen Hansen

Jorgen Hansen

Concordia University, Quebec - Department of Economics; IZA Institute of Labor Economics; Center for Interuniversity Research and Analysis on Organization (CIRANO)

Magnus Lofstrom

Public Policy Institute of California; Institute for the Study of Labor (IZA)

Multiple version iconThere are 2 versions of this paper

Date Written: September 2001

Abstract

This paper analyzes transitions into and out of 3 different labor market states, social assistance, unemployment and employment. We estimate a dynamic multinomial logit model, controlling for endogenous initial condition and unobserved heterogeneity, using a large representative Swedish panel data set, LINDA, for the years 1990 to 1996. The unadjusted data indicates that immigrants are more likely to receive both social assistance and unemployment compensation than natives. Immigrants are less likely to remain employed in consecutive years than natives and are more likely to stay on welfare and to receive unemployment insurance in a year, given participation in the previous year. The empirical results suggest that refugee immigrants display a greater degree of "structural" state dependence than natives. Further, immigrants from non-refugee countries display a similar degree of "structural" state dependence as natives. The high welfare participation rates among refugee immigrants seem to be due to the existence of a "welfare trap", while participation among natives and non-refugee immigrants is largely due to permanent unobserved characteristics. These results suggest that welfare reforms will have differential effects on refugee immigrants and natives.

Keywords: Welfare, Labor Market Behavior, Transition, Immigration, State Dependence

JEL Classification: I30, I38, J15, J18, J61

Suggested Citation

Hansen, Jorgen and Lofstrom, Magnus, The Dynamics of Immigrant Welfare and Labor Market Behavior (September 2001). IZA Discussion Paper No. 360. Available at SSRN: https://ssrn.com/abstract=283455

Jorgen Hansen

Concordia University, Quebec - Department of Economics ( email )

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IZA Institute of Labor Economics

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Center for Interuniversity Research and Analysis on Organization (CIRANO) ( email )

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Magnus Lofstrom (Contact Author)

Public Policy Institute of California ( email )

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Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
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